MANILA — The Philippines secured $2.5 billion from the international debt market through a triple-tranche global bond offering aimed at meeting the country’s budgetary requirements.

The Bureau of the Treasury (BTr) announced on Thursday that the 5.5-year tranche has a yield of 4.375 percent and was priced at T+75 basis points (bps), 35 bps tighter than the initial price guidance, resulting in a 5 bps new issue concession.

The new 10.5-year tranche was priced at T+95 bps, 30 bps tighter than the initial price forecast, with no new issue premium, landing at a yield of 4.750 percent.

Meanwhile, the 25-year sustainability tranche was priced at 5.175 percent, 32.5 basis points tighter than the initial price forecast, and included a 2.5 basis point reduction.

According to the BTr, the 5.5-year bond has the lowest spread of any comparable bond issued by the government since June 2021. Similarly, yields on the 10.5-year and 25-year bonds have reached their lowest levels since March 2022.

“The Republic will partially allocate the 25-year Global Bond sale proceeds to assets under the Republic’s Sustainable Finance Framework,” the BTr stated.

The transaction is expected to settle on September 5.

The BTr noted that the government capitalized on benchmark rates that were beginning to moderate, as investor confidence in impending rate cuts was bolstered by dovish signals from the US Federal Reserve and lower inflation data.

Proceeds from the 5.5-year and 10.5-year global bond sales will be utilized for general budget financing, while proceeds from the 25-year global bond sale will be used for refinancing programs and expenditures that align with the Republic’s Sustainable Finance Framework, as well as general budget financing.

Latest Transaction Attracted Robust Demand

National Treasurer Sharon Almanza stated that the most recent transaction drew robust demand and strong momentum across markets, with interest from a diversified pool of high-quality global accounts.

“The exceptionally tight pricing across all offerings enables the government to conserve on interest payments, thereby allowing more fiscal space to flow into transformative investments. Thus, the favorable outcome of the transaction further strengthens the Philippine Government’s position to fulfill its commitments to fiscal consolidation and rapid economic growth,” Almanza said.

Meanwhile, Finance Secretary Ralph Recto noted that the transaction is also a sign of confidence in the country’s strong credit rating.

“We are very pleased to see the overwhelming investor interest in our new USD 2.5 billion triple-tranche global bonds. In fact, compared to our regional peers, the Philippines’ issuance achieved among the best pricing in all of our tranches this year. This is a resounding vote of confidence in our country’s solid credit profile,” Recto said.

“More importantly, this is a significant win for every Filipino as we are raising funds at very affordable costs to support programs and projects that will boost economic growth, create quality jobs, increase incomes, and reduce poverty,” Recto added.

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